You can't argue that Amazon.com founder Jeff Bezos didn't get a great price for buying The Washington Post (NYSE:GHC). For just $250 million, he's getting one of the most storied dailies in the country. But with waning readership, increased costs, plunging advertising, and expensive legacy costs, the question isn't "Can Bezos save the Post?" -- rather, it's "Should he?"
As a private entity, it will no longer be in the glare of analysts clamoring for quick fixes, but daily newspapers are still a dying breed, sunk and often scooped by the alternative press. The New York Times (NYSE:NYT) just announced it was selling The Boston Globe for a mere pittance of $70 million after having purchased the paper for $1.1 billion in 1993.
A decade ago, the Post would have sold for $2 billion according to analysts, but over the past six years it's suffered a 44% plunge in operating revenues as circulation has tumbled 7% over the first half of the year.
When you can get information almost instantaneously on the Internet, getting news the next day seems so...1990s. It's understandable why the weeklies are a shell of their former selves. Newsweek, for example, just got sold to International Business Times for an undisclosed sum after it derailed The Daily Beast's attempt to turn a profit . Notably, WaPo actually sold Newsweek to the Beast for $1 in 2010.
The are only a few papers that can still point to subscriber growth these days. News Corp.'s Wall Street Journal is one of the few that can point to seeing more readers, with average weekday circulation of 2.4 million as of March 31, up 12% from the year-ago period. USAToday publisher Gannett, on the other hand, saw circulation fall 8%.
There's a certain irony in Bezos' purchase of the paper. His founding of Amazon heralded the onslaught of the digital age over physical media and it ushered in the destruction of numerous brick-and-mortar retailers. A digital captain of industry taking over the last vestiges of a dying industry he helped bring to its knees is a wonderful juxtaposition.
It wasn't so long ago when newspapers were important. The publication of the Pentagon Papers, the investigative journalism into the Watergate break-in, and numerous other superlative pieces were the meat and bones of why Thomas Jefferson thought press freedom was essential to liberty.
But more often than not these days, the mainstream media have become outlets for advocacy and are routinely scooped by alternative news outlets. It wasn't an American newspaper that broke the pervasiveness of the NSA's spying programs, but rather the U.K.'s Guardian. The New York Times' opinion pages actually applauded the IRS investigating so-called Tea Party groups. They've lost their way in challenging government excess.
Last year, WaPo posted a near-$54 million loss as print advertising collapsed 14% to $228 million. Perhaps Bezos is hoping to effect a change of fortunes like that recently seen at the Times, which posted a second-quarter profit as greater digital sales bolstered the bottom line. Digital-only subscription packages, e-readers, and replica editions were up 44% in the quarter, and it may be that angle that the Kindle maker sees as a source of future growth.
When even Warren Buffett has seen his investment devastated by the implosion of the industry, Amazon's founder seems to be on something of a quixotic journey here. The Washington Post may have once been as venerable as the rival Gray Lady, but there seems little to warrant throwing a quarter of a million dollars away on a dying business.